The decision to start a business brings many questions, among the chief of them: “What form?” The location, nature of your business, other tax and reporting considerations of the business and of the shareholders all drive this decision.
The legal form of a Czech LLC (an “s.r.o.”) is primarily regulated under the Commercial Law, 513/1991 Sb, §105-153. The formation of a LLC can be in many cases an essential part of any strategy to retain privacy or limit liability on your assets. It can also be a flexible and relatively cost-effective vehicle to engage partners and secure finance. Formation of an LLC usually involves
- analysis of business model, strategy to identify potential jurisdictions for incorporation and structure
- analysis of shareholder tax exposure to income flows in eeach potential jurisdiction
- identification of shareholders and their shares of participation
- appointment of directors and/or secretary
- payment of capital
- registration with a centralized company register
- registration with the tax, trade licensing and sometimes health and social insurance authorities
The step to create an LLC is one to take under advisory – doing so can have significant and irreversible impact on shareholders’ tax profile, especially for American shareholders and directors in an American-controlled entity. Failure to file in a complete and timely manner in accordance with IRS 6038 and 6046 on Certain Foreign Corporations can result in penalties starting at US 10.000 – even when no tax is due.
Please feel free to explore these issues with CFO2GO. We take your needs seriously and will help you evaluate your exposure locally and well as internationally to protect you and your interests.
